ACCT 2301 - Test 1

23. Prepaid expenses are eventually expected to

Become expenses when their future economic value expires

32. Which of the following concepts relate to separating the reporting of business and personal economic transactions?

Business entity concept

17. Which of the following is an example of accrued revenue?

Swimming pool cleaning that has been provided but has not been billed or paid

12. The chart of accounts classifies classifieds the accounts to make identification of the accounts easier. This is done by way of assigning a number to each account. The first number identifies the classification of the type of account. Which of the following indicates the use of this classification?

1-Assets, 2-Liabilites, 3-Stockholders' Equity, 4-Revenues, 5-Expenses

29. On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $125,000. On June 20, the land was assessed at a value of $95,000 for property tax purposes. On August 4, Gregg repair service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repairs Service's records?

$125,000

36. Austin manufacturing co. depreciates its physical assets using the straight-line method of depreciation. If Austin purchased office furniture in 2014 for $24,000 and which has an estimated six year useful life. What would be the correct amount of depreciation expense for Austin to record in 2014?

$4,000

26. The assets and liabilities of the company are $128,000 and $84,000 respectively. Stockholders' equity should equal

$44,000

20. The balance in the offices supplies account on June 1 was $7,500, supplies purchased during June was $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

$8,300

45. Prairie Clinic purchased X-ray equipment for $7500. Prairie paid $2,250 in cash as a down payment, with the remainder to be paid over time. The correct journal entry to record this transaction would be

...

46. Which of the following is considered to be an accrued expense?

A computer technician has installed the latest software updates, but you have not received their invoice for payment

Wilson debits its cash account as a result of selling $100,000 of equipment to Huntsville Independence School District. Which of the following would complete the recording of this transaction?

A credit to Revenues for $100,000

40. The unexpired insurance at the end of the fiscal period represents

A deferred expense

25. Which of the following is the best description of accounting's role in business?

Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company

42. The balance of the account is determined by

Adding all of the debits, adding all of the credits, then subtracting the smaller sum from the larger sum

31. How does the purchase of equipment by signing a note (purchase using credit) affect the accounting equation

Assets increase; liabilities increase

19. Adjusting entries always include

At least one income statement account and one balance sheet account

Which of the following is not a common form of business entity?

Common law company

38. The type of account and normal balance of Accumulated Depreciation is

Contra asset, credit

21. The adjusting entry to record the depreciation of equipment for the fiscal period is

Debit Depreciation Expense; credit Accumulated Depreciation-Equipment

37. A business pays bi-weekly (every 2 weeks) salaries of $20,000 every other Friday for a ten day period ending on Friday. The last pay day of December is Friday, December 27. Assume the next pay period begins on Monday, December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the payment of the payroll on Friday, January 10 includes a

Debit to Salary Expense of $16,000

What effect does the journal entry shown below have on the accounts? June 10 Accounts Payable............................$800 Cash.............................................$800 Paid creditors on account

Decrease accounts payable; decrease cash

39. As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of the fixed asset is systematically allocated to expense through a process called

Depreciation

24. Which of the following is not true regarding depreciation

Depreciation expense reflects the decrease in market value each year

15. The revenue recognition principle

Determines when revenues is credited to the revenue account

9. Which of the following accounts is a stockholders' equity account?

Dividends

14. When a transposition error is made on the trial balance, the difference between the debit and credit totals on the trial balance will be

Divisible by 9

30. Within the United States, the dominant body in the primary development of accounting principles is the

Financial Accounting Standards Board (FASB)

The key reason companies follow and apply generally accepted accounting principles is

GAAP provides comparability

Profitability of a business is reported on which of the following financial statements?

Income Statement

10. The ____________ is where a transaction is first listed in the accounting records

Journal

According to the accounting equation, assets must equal

Liabilities plus stockholders' equity

22. The type of account and normal balance of Unearned Rent is

Liability; credit

27. Two common areas of accounting that respectively provide information to internal and external users are

Managerial accounting and financial accounting

SuperBurgers incurs an electric bill for August in the amount of $32,000 but actually pays the electric bill in September. According to the ______________ principle, SuperBurgers recognizes the $32,000 expense in August.

Matching principle

18. Adjusting entries are

Needed to bring accounts up to date and match revenue and expense

33. The net book value of a fixed asset is determined by

Original cost less accumulated depreciation

41. The process of transferring the debits and credits from the journal entries to the ledger accounts is called

Posting

34. Which of the accounting steps in the accounting process below would be completed last?

Preparing the financial statements

According to the journal entry below, what is the best explanation for the journal entry? March 6 Cash..................................................$2,500 Unearned Fees.............................$2,500

Received cash for the services to be performed in the future

28. Profit is the difference between

The amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services

8. Which of the following is true about a T account?

The left-hand side of the T account is called the debit side

11. Which of the following is not a correct rule of debits and credits?

The normal balance for revenues and expenses is a credit

35. What is the purpose of the adjusted trial balance?

To verify the equity of the debit and credit balances

13. Which of the following will determine if the accounting equation is in balance?

Trial balance

7. A chart of accounts is

Usually a listing of accounts in financial statement order

16. Using accrual accounting, expenses are recorded and reported only

When they are incurred, whether or not cash is paid